Private Mortgage Lending. Learn how to Earn Safe, Passive and Better Returns
Secured by low LTV real estate
Private Lending is an old business. Long before all major banks, credit cards and finance companies, individuals borrowed money from others in exchange of interest payment. A private lender is someone who lends money to a real estate investor who will buy a property at a wholesale price and below current market value. The money can be used to purchase single family homes, rental real estate investments, commercial projects or to supplement funds borrowed from a bank to cover down payments. The private lender receives all the property details before making a decision. There is never any obligation for the lender to participate in a deal. First mortgage lenders usually will lend up to 90% of the purchase price or up to 75% of the after repaired value (ARV). Second mortgage lenders will lend up to 100% of the down payment after a loan is arranged with the Bank for the first 70% to 80% of the purchase price. Investors and Private Lenders needs to discuss on a personal basis to borrow money for real estate investments.
Example of a Private Mortgage Loan: If the real estate investor purchase a single family home in a nice neighborhood that is worth $100,000 after repairs, the private mortgage loan would not exceed $70,000 (70% LTV). The Private Lender is protected with a good equity position. The lenders have usually absolutely no fees to pay.
Advantages of Private Lending
The Private Lender is in total control of his money and he acts like a bank so he can choose how he will put his money to work for him. There is less worrying than the stock market because the investor (lender) gets fixed returns. The investment is always protected by a mortgage against only one property. To make sure all transactions and investments are secured legally and properly, all funds are sent and handled by Attorneys and/or Title companies choosed by the Lender. There is always a good equity safety net in each project based on current appraised value.
Private Mortgage Loan
A Private Mortgage Loan is simply a loan that his made to a real estate investor that is secured by a property that have low LTV ratios. The mortgage provides the Lender with the first level of security on the loan.
The private lender needs to receive a Promissory Note, a Mortgage Note recorded against the property, hazard insurance + title insurance and a copy of the property analysis and appraisal. The Private Lender can choose to work with his own lawyer(s) and title company.
How does it work?
Contact us by email to learn more about private mortgage loans. Private real estate investors and ”sopĥisticated investors” discuss about investment preferences, amount, terms and availability of funds of the lender. They can then help to find one or many properties that will fit their needs at their request.
